John Lewis Partnership has posted a 26 per cent slide in half-year profits after being hit by costs of its staff pension fund and warned full-year results would also be sharply lower in a tough retail market.
Trading at its Waitrose supermarket chain came under pressure amid “turmoil” in the sector, with comparable store sales down 1.3 per cent - the first fall for seven years.
The partnership said underlying profits sank to £96m in the six months to August 1 as recent stock market woes impacted its pension fund and left it facing higher charges.
After stripping out these costs and one-off boosts from property sales last year, trading profits were broadly level in the first half as a three per cent rise in sales at its department store chain helped offset the supermarket woes.
The difficult trading and an extra pension fund charges this financial year are expected to drive annual pre-tax profits to between £270m and £320m against £342.7m previously.
Chairman Sir Charlie Mayfield said: “Conditions will remain difficult, especially in grocery where there is little sign of any price inflation.”
“Pension charges will be approximately £60m higher than the comparable figure last year, predominantly arising from volatility in the market-driven assumptions.